Increased production leads to PMI Output Index of 60.7 in July's manufacturing sector.
In July 2025, Indian manufacturers led the way in business activity, recording faster rates of expansion in total sales, export orders, and output levels compared to the services sector. This growth was primarily driven by the manufacturing sector, as indicated by the HSBC Flash India composite PMI output index, which rose to 60.7 from 58.4 in June.
The HSBC Flash PMI, a private survey showing the current status of business activity in India, revealed that Indian manufacturers are experiencing subdued inflationary pressures. This is reflected in the moderation of input costs and output prices in manufacturing activity.
Headline inflation fell to 2.1% in June 2025, the lowest since January 2019, primarily driven by a sharp decline in food prices. This easing in inflation translates into moderated cost pressures for manufacturers, enabling them to manage input costs more effectively.
The Reserve Bank of India’s recent interest rate cuts and shifting monetary policy focus from inflation control to growth support also suggest lower inflationary pressures on manufacturers, helping reduce cost burdens and potentially supporting increased production and investment.
The HSBC Flash India Composite PMI for July 2025 indicates that the current inflationary pressures on Indian manufacturers are relatively low, aiding in mitigating input cost escalation and supporting manufacturing output growth.
However, despite the growth, business confidence fell to its lowest mark since March 2023, and employment growth moderated to its weakest pace in 15 months. Additionally, the HSBC Flash PMI for both manufacturing activity and services sector eased in July compared to June, with manufacturing activity picking up to 60.7 and services sector easing to 59.8.
On a separate note, the Election Commission of India stated that 67.4 lakh (6.74 million) are not on the voter rolls for the Bihar elections, and the Opposition has threatened to boycott the Bihar polls.
[1] Source: HSBC India Press Release, July 2025 [2] Source: Reserve Bank of India Monetary Policy Statement, July 2025 [3] Source: Government of India Consumer Price Index Report, June 2025 [4] Source: Government of India Food Price Index Report, June 2025
- The subdued inflationary pressures in the manufacturing industry, as indicated by the moderation of input costs and output prices, could potentially enable manufacturers to finance increased production and investment, considering the recent interest rate cuts and the shift in monetary policy focus by the Reserve Bank of India.
- Despite the robust expansion in manufacturing activity in July 2025, the HSBC Flash India Composite PMI suggests that current inflationary pressures are relatively low for Indian manufacturers, creating a favorable financial environment to mitigate input cost escalation and support manufacturing output growth.
